WASHINGTON (Legal Newsline) – The Consumer Financial
Protection Bureau (CFPB) announced this week that it took action against Navy
Federal Credit Union after allegations the organization used false threats
about debt collection.
Members of the union include active-duty military,
retired service members and their families.
To resolve the allegations, Navy Federal Credit Union will
correct its debt collection practices and pay $23 million in redress for
alleged victims along with $5.5 million in civil penalties. The civil penalty
money will go toward the CFPB’s Civil Penalty Fund.
“Navy Federal Credit Union misled its members about its debt
collection practices and froze consumers out from their own accounts,” CFPB Director Richard Cordray said. “Financial institutions have a right to collect
money that is due to them, but they must comply with federal laws as they do
The CFPB specifically alleged that the union made false
threats of legal action and wage garnishment, false threats to service members
that it would contact their superiors, and misrepresentations about credit
consequences involved with loans.